ROI on Digital Marketing: What to Do When Your Investments Aren’t Paying Off
Advertisement expenditure in the Middle East and North Africa (MENA) region is expected to exceed $12 billion by the end of 2024, up from around $9.2 billion in 2021, according to German-based research company Statista.
In digital marketing, a simple but often overlooked formula for tracking returns on investment (ROI) helps validate the effectiveness of your campaign. The formula consists of dividing your net profit by the total digital marketing costs and then multiplying the result by 100. As a rule of thumb, a 5:1 marketing ROI ratio is considered good for most businesses, while a 10:1 ratio is viewed as excellent. The ratio is arbitrary and can vary based on several factors over time, sometimes reaching 2:1—a still positive result.
However, if it’s easy to calculate ROI for digital marketing, why do many neglect to assess it?
Failing to follow up on ROI often leads businesses to realize their investments aren’t paying off much too late. However, companies often struggle to identify the specific disruptors in their digital marketing campaigns rather than acknowledging that a disruptor exists.
3 Marketing Failures & What to Learn from Them
Examining high-profile setbacks can help businesses enhance their ROI from digital marketing while avoiding costly experimentation phases.
1- Cheetos Lip Balm
If people devour even the Cheetos crumbs on their fingers, they will certainly like a Cheetos-flavored lip balm, right?
Not really.
Venturing into new markets may be easier with an established brand, but that’s not a given. In 2005, PepsiCo subsidiary Frito-Lay felt the bitter taste of a product-brand mismatch exacerbated by a poorly executed marketing campaign.
Despite Frito-Lay’s promise of a unique experience, the company faced heavy mockery on social media and struggled to convince its target audience that the long-lasting cheese flavor was worth trying. In fact, it repulsed even the most devoted Cheetos fans, leading to the lip balm’s swift discontinuation.
At VALUWIT, we emphasize the importance of surveying your target audience’s needs and expectations before launching a new product, especially when the product deviates from what is already accepted in the market and relies heavily on a digital marketing strategy that entices consumers to embrace a new customer experience.
2- BMW Middle East Campaign
The sound of a powerful car engine can indeed impress. However, BMW went a little too far when trying to make that point in the Middle East.
In 2016, Abu Dhabi Motors, the German company’s authorized distributor in the UAE capital, attempted to merge two Emirati passions: cars and soccer. The marketing campaign featured fans of the Al Ain FC soccer team singing the UAE national anthem but stopping midway at the sound of a BMW engine.
Citizens took deep offense at the misuse of the national anthem, prompting Abu Dhabi Motors’ general manager, Arno Husselmann, to pull the advertisement and issue a public apology. The backlash also resulted in the dissolution of Al Ain’s and their investment firm Al Ain Club’s Board of Directors.
The case stands as a testament to the importance of considering your target audience’s culture when establishing your campaign.
3- Burger King’s Women’s Day Tweet
Digital marketing mistakes are not exclusive to small or inexperienced companies. In 2021, Burger King UK decided to engage audiences on International Women’s Day with a Twitter thread – now on X – that began with the sexist tweet, “Women belong in the kitchen.”
The thread did draw attention, but not for the reasons the company expected. While the controversial tweet was followed by another one that stated, “If they want to, of course,” along with the statistic that only 20% of the UK’s chefs are women, few people found it convincing, especially on International Women’s Day.
The backlash served as a sharp reminder that unclear positioning and using stereotypes and social prejudices as clickbait can and will backfire.
Also Read: How to Measure the Success of Your Digital Transformation Strategy
3 Steps to Drive Significant ROI from Digital Marketing
The presence of digital marketing missteps among well-established multinationals, despite their substantial budgets and huge customer bases, should serve as an instructive encouragement for smaller players rather than deter them from experimentation and innovation.
Moreover, these instances of suboptimal execution present valuable opportunities for strategic analysis and performance optimization.
To maximize ROI in digital marketing initiatives, businesses should consider implementing the following evidence-based strategies
1- Keep Up with Existing Customers
Imagine trying to engage with Italians by speaking old Latin. At any given moment, you will most likely be misunderstood—even though people from what is now Italy would have understood you in the past.
Just as languages evolve, so does your target audience. Because customers’ needs and expectations change over time, it’s crucial to survey their online presence and stay attuned to their behavior to effectively communicate with them.
According to Fred Reichheld of Bain & Company, increasing customer retention by just 5% can already lead to profit increases of 25% to 95%.
2- Optimize Underperforming Campaigns
A/B testing—a method that compares the outcomes of two hypothetical strategies – is an effective way to reassess target audiences and recalibrate campaigns that no longer deliver the expected results.
This testing can be supported by social media engagement metrics, which can be measured and analyzed using built-in tools within these platforms or specialized analytics platforms like Google Analytics and Adobe Analytics.
Additionally, automating engagement metrics through technologies such as artificial intelligence and machine learning enhances data accuracy and integration. This allows your digital marketing team to focus more on creativity rather than spending time on data collection, as highlighted in research published by the International Journal of Management (IJM).
3- Regularly Review Cost Management
Costs are not static. What one could buy with $10 five years ago is no longer the same as what that amount can purchase today. This change is driven not only by inflation but also by fluctuations in operational costs, including commodities, labor, and energy prices.
Conducting regular financial and operational audits is essential for identifying early signs of profit erosion that can negatively impact ROI. By reviewing costs consistently, you can establish clear goals and promote collaboration between marketing and sales teams, ultimately paving the way for strategic success.
Start Maximizing Your Marketing ROI Today
Improving your marketing ROI is essential for maximizing the effectiveness of your investments and ensuring sustained business growth. By implementing key strategies such as staying attuned to your customers’ evolving needs, continuously optimizing underperforming campaigns, and conducting regular audits to manage costs, you can create a more efficient and impactful digital marketing strategy.
